Productivity growth in pre‐ 1990 Mongolian agriculture: spiralling disaster or emerging success?

Abstract The reasons for the spectacular collapse of so many centrally‐planned economies are a source of ongoing debate. In this paper, we use detailed farm‐level data to measure total factor productivity (TFP) changes in Mongolian grain and potato farming during the 14‐year period immediately preceding the 1990 economic reforms. We measure TFP growth using stochastic frontier analysis (SFA) and data envelopment analysis (DEA) methods. Our results indicate quite poor overall performance, with an average annual TFP change of – 1.7% in grain and 0.8% in potatoes, over the 14‐year period. However, the pattern of TFP growth changed substantially during this period, with TFP growth exceeding 7% per year in the latter half of this period. This suggests that the new policies of improved education, greater management autonomy, and improved incentives, which were introduced in final two planning periods in the 1980s, were beginning to have a significant influence upon the performance of Mongolian crop farming.